We are financially strong and well-capitalised: IndusInd Bank

Private sector lender IndusInd Bank has said it is financially strong, well-capitalised and profitable, amid market rumours about the health of the lender after the Yes Bank crisis came to light. “In the wake of the significantly higher level of market rumours and speculation around IndusInd Bank stock, we would like to reiterate that the Bank is financially strong, well-capitalised, profitable, and a growing entity with a strong governance,” it said in a late night statement on Tuesday.

The bank’s stock ended nearly 9 per cent down at Rs 604.30 on the BSE on Tuesday.

The lender said gross non-performing assets (NPAs) in December quarter 2019 stood at 2.18 per cent which was lowest among large private sector banks.

“We expect current quarter gross NPA to be pretty much in line with that of last quarter. We expect our net NPA of 1.05 per cent as at the last quarter to fall below 1 per cent, in line with our ambition to take provision cover beyond 60 per cent,” it said in the statement.

Citing reports on relief measures to the telecom sector, IndusInd Bank said this is a significant positive step and the bank awaits further details on the matter.

The bank noted that its latest gross NPA figure as at the end of February 2020 was zero with respect to real estate developer (commercial & residential); gems and jewellery financing.

Commercial vehicle and microfinance portfolios remain steady and range-bound, it added.

“Market rumours about individual exposures doing the rounds are bloated and outlandish and nowhere near the truth. The bank makes full disclosures every quarter on its loan book profile.”

On liquidity, it said the bank maintains liquidity well above 100 per cent going up to 120 per cent on a daily basis.

The deposit business of the bank on both retail and corporate segments is steady.

“However, a couple of state government entities have made withdrawals amounting to less than 2 per cent of our total deposits. We are engaging with them to reiterate the stance of the Regulator that Government deposits in all private sector Banks is safe,” the bank said.

The bank has been a lender in the interbank market last week and at 15.43 per cent CRAR –capital to risk weighted assets ratio — (including 9 month profits), the bank does not need capital for 2 years.

“All our banking with other banks and counterparties is ‘business as usual’. We continue to enjoy interbank lines / limits without interruption,” said the lender.

Also, the bank promoter has sought RBI approval to increase shareholding to 26 per cent and further guidance from the regulator is awaited.

The promoter has already informed the exchange about the simultaneous release of non-disposal undertaking with the creation of a pledge in relation to 23.8 million shares of the bank.

No new borrowing was undertaken and was merely a formalisation of a three-year old arrangement. The money was originally raised to make an overseas acquisition which did not fructify – the pledge is a small fraction of promoter holding in the bank, it said.

“Various market rumours and speculation incorrectly reflect on the Bank’s financial health and are totally misplaced, motivated and not based on facts,” the lender said. IndusInd Bank stock was trading 27.19 per cent down at Rs 440 on the BSE.

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